2. the business of foreclosure in this module: mortgage theory types of foreclosure
DESCRIPTION
2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure Professionals involved in foreclosure. Lien, Title, and Intermediate Theory. Lien theory: Title is in borrower’s name title; mortgage deed lien filed by the lender. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/1.jpg)
1
2. The Business of Foreclosure
In this module:
• Mortgage theory
• Types of foreclosure
• Professionals involved in foreclosure
![Page 2: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/2.jpg)
2
Lien, Title, and Intermediate Theory
• Lien theory: Title is in borrower’s name title; mortgage deed lien filed by the lender.
• Title theory: Title is in the lender’s name; borrower is granted a trust deed.
• Intermediate theory: Borrower holds title unless loan is in default; ownership goes to the lender upon default.
![Page 3: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/3.jpg)
3
Lien, Title, and Intermediate Theory
Why is it important to know which theory is used in your state?
The theory determines:
1. Who owns the property prior to foreclosure
2. The timeline of foreclosure
![Page 4: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/4.jpg)
4
Lien, Title, and Intermediate Theory
Who benefits?
Lien (mortgage) benefits the borrower —it ‘buys’ more time
Trust (deed) benefits the lender—it’s more expedient
![Page 5: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/5.jpg)
5
Types of Foreclosure
Judicial
• Ordered by court
• Timeline is longer
• Many states allow “summary judgments”
![Page 6: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/6.jpg)
6
Types of Foreclosure
Non-judicial
• Pre-authorization to sell is granted in the loan document.
• Trustee is granted the right to sell upon a foreclosure.
• Timeline is shorter.
![Page 7: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/7.jpg)
7
Types of Foreclosure
Judicial usually occurs in lien (or mortgage) states.
Non-judicial generally occurs in title (or deed) states.
![Page 8: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/8.jpg)
8
1) Pre-lien30 days
2) Lien30 days
3) Notice of default (NOD) 90 days
4) Notice of sale 21-25 days
5) Trustee sale
If unsold
6) REO
A. Pre-Foreclosure
B. Auction
C. REO
Foreclosure Process
Notification 30 days following default
NOD initiates the foreclosure process and redemption period
Auction—sheriff’s sale
REO—bank-owned property
![Page 9: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/9.jpg)
9
The Foreclosure Process
Redemption period
• Provides the borrower the opportunity to recover the property after the foreclosure process begins
• Varies from state to state
• Ask the lender, “Can the borrower redeem the property by paying past due amount including penalties and interest, or must it be paid in full?”
![Page 10: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/10.jpg)
10
The Foreclosure Process
The lender’s situation and incentives?
• Lender’s role changes from servicing the borrower to selling the property.
• Lender is motivated to recover the current and minimize the future loss.
![Page 11: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/11.jpg)
11
Professionals Involved in Foreclosures
Lender-Employee Asset Manager • Employed by lender• Project manager overseeing the REO
from list-to-sell
Outsource Asset Management Company (OAMC)
• Third party performing same duties as an asset manager
![Page 12: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/12.jpg)
12
Professionals Involved in Foreclosures
Finder• Third-party company• Similar to a utility player in baseball
—takes on any responsibility required by the OAMC or asset manager
• Typically has limited decision making authority
![Page 13: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/13.jpg)
13
Professionals Involved in Foreclosures
REO Representative• Third party from lender• Listing broker
Vendor Management• Property preservation including re-
key, trash-out, etc.
![Page 14: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/14.jpg)
14
Professionals Involved in Foreclosures
Eviction Specialist• Makes sure REO properties are
vacated
Loss Mitigation Specialist• Attempts to assist in avoiding
foreclosure through workout programs
![Page 15: 2. The Business of Foreclosure In this module: Mortgage theory Types of foreclosure](https://reader036.vdocuments.mx/reader036/viewer/2022062803/568147e2550346895db516bd/html5/thumbnails/15.jpg)
15
Professionals Involved in Foreclosures
Auditors• Local government resource for
properties
Attorneys• Hired by lender• Performs legal work• Works with lender’s loss mitigation
specialist